Insurer Aetna suspended from Medicare enrollment

INDIANAPOLIS 
Regulators have suspended Aetna Inc. from enrolling customers in Medicare Advantage plans due to changes the health insurer made to its Part D prescription drug coverage.

The Hartford, Conn., company said the suspension starts April 21. It covers all Medicare Advantage plans as well as plans that just provide Medicare's prescription drug coverage. Aetna also cannot market the plans under the suspension.

Medicare Advantage plans are privately run versions of the government's Medicare program, which provides health coverage for the elderly and disabled. The plans, subsidized by the government, offer basic Medicare coverage topped with extras or premiums lower than standard Medicare rates.

The sanction stems from changes the insurer made from 2009 to 2010 in drugs covered by certain plans. Aetna officials said they were working with the Centers for Medicare and Medicaid Services to resolve the issues.

Spokesman Fred Laberge said Aetna switched its Part D prescription drug coverage from an open formulary to a closed one, which involves payment tiers and in some cases favors generic drugs over brand names.

A letter from CMS to Aetna said the insurer failed to properly transition some customers from drugs covered under the old formulary to those covered under the new one. It also said some customers received incorrect denials of medications, which delayed their prescriptions.

About 20,000 people were affected, but that does not include anyone who signed up for a plan this year, according to Laberge. Aetna is contacting affected customers to resolve any problems.

Medicare Advantage plans represent a relatively small slice of Aetna's business. The company had 18.9 million people enrolled in health insurance plans at the end of last year. Of that total, about 433,000 were enrolled in Medicare Advantage plans.

It also had about 346,000 people enrolled in just the Part D prescription drug coverage, without the Medicare Advantage health insurance.

Barclays Capital analyst Joshua Raskin said in a note to investors the sanctions likely will be immaterial to the company in part because enrollment for next year doesn't start for seven months.

Most customers sign up for Medicare Advantage coverage between Nov. 15 and the end of the open enrollment period for the plans on March 31.

He said he expects the issue will be resolved "sooner than later and have little impact on Aetna's operations in the future."

"We believe that the headlines sound a lot worse than the actual implications," he wrote.